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How to Boost Your Credit Score 90+ Points Using These Secured Credit Cards

If you are having trouble with your credit score because of lack of credit or because you have had credit issues in the past that have lowered your score, there are ways you can boost your score. The most effective way of increasing your credit score in this situation is by obtaining a secured credit card.

What Is A Secured Credit Card? Simply put, a secured credit card is a credit card that is backed by a deposit account. You open one of these accounts by depositing money into an account that will reflect the amount of credit that you will have on your card. Some companies that issue these cards allow for 100 percent matching, other companies may only give you 90 percent of your deposited amount. Once you have established this savings account, your card will be an active credit card in every way.

You Must Make Timely Payments

Since a secured card is an actual credit card and not a debit, you must make timely payments on the account each month. All the same conditions of a credit card will apply to this card and in the same way. This means if you pay on time each month it will be reported to the credit bureaus and improve your score. However, if you fail to make these payments, this will also be reported and can impact your score negatively.

It is also in your best interest to avoid late payments because their will be fees associated with these and a potential for your interest rates to increase on the card. An increase in interest rates will significantly decrease the amount of credit you have available, reduce your spending abilities, and cost you more to repay your debts. Other fees associated with late payments may also be overdraft charges or over limit fees. If possible, you should set your credit card up on auto pay so that it is always on time.

What About The Money I Deposited?

The money that you have deposited for this account is sitting securely in a savings account. In fact, it is probably even generating a little bit of interest while it is being held. After a certain amount of time, anywhere from 1-3 years depending on the card, the money will be released to you and the card will be converted to a regular credit card instead of a secured account. Some institutions allow you just to put that money towards the balance, or you can have a check issued for the full balance.

What Else Can I Do To Boost My Score?

Using your secured card wisely and making timely payments is the best way to increase your credit score. Try to keep your balances below 30 percent of your available credit. So, if you have $300 deposit on the card, it would be optimal to only carry a balance of $100 on the card each month. This is after any payments you make. It is also very important that you keep all your other credit accounts in good standing while you are trying to reestablish your credit score with a secured card. Having multiple on time payments each month is the best way to improve your overall score.

A final tip for improving your credit score is to not take out too much credit in a short period of time. Many people believe that if they open up several small secured accounts at once, they will have a great credit score. In reality, having too many open or new accounts at one time makes your credit score drop. Never apply for more than three credit lines in any 30 day period, and if possible, try to refrain from applying for too many lines of credit during any 60 day period. A secured credit card is one of the most effective ways for you to rebuild your credit and boost your credit score if you manage the card correctly.